Are the Shorts Right About This Automaker?

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes discusses topics across the investing world.

In today's edition, Brendan takes a look at the most shorted automaker on U.S. exchanges: Tesla. About 34% of Tesla's float is shares sold short, not particularly surprising for a company that's still not making money. But Brendan thinks the shorts are wrong. Tesla has done a great job increasing orders for its flagship Model S sedan, and will introduce an SUV and possibly a more affordable small car in the future. The biggest test for Tesla is whether it can produce and deliver these orders on time, an area where the company is looking good as well. But while Brendan certainly wouldn't short Tesla, the stock's still just a bit too risky for him. Whether the electric vehicle can go mainstream is still very much up in the air, and Tesla could have issues if some of the major automakers with their deep pockets make EVs more of a priority.

Tesla is certainly a risky stock with huge potential, but we've uncovered a different company that our analysts think could have even better growth prospects. This stock has so much promise that we've dubbed it "The Motley Fool's Top Stock for 2012." We've created a special free report for investors to uncover this soon-to-be rock star. The report highlights a company that is revolutionizing commerce in Latin America, and you can get instant access to the name of this company by clicking here to download it now.